The Arkansas Cryptomining Association has initiated legal action against two state officials, claiming they have implemented an unconstitutional and discriminatory regulation that restricts foreign-born American citizens from participating in crypto-mining activities, among other issues.
The lawsuit was filed against the state’s Attorney General and the head of the Arkansas Oil and Gas Commission on March 13 in the US District Court for the Eastern District of Arkansas. This follows a federal court decision last November that temporarily stopped Arkansas from blocking a naturalized US citizen of Chinese descent from running a crypto mining business.
The contested state regulations are referred to as “Rule K” and “Act 174,” which forbid businesses controlled by foreign parties from operating within the state.
Connor L. Kempton, the director of the Arkansas Cryptomining Association, asserted that the ambiguity surrounding Rule K and Act 174 grants the defendants unchecked enforcement authority, allowing them to issue or reject permits at their discretion.
He emphasized that the enforcement of these rules is unconstitutional and could lead to discrimination based on race, alienage, and national origin, among other factors.
Kempton highlighted that these regulations were applied against Jones Eagle LLC, a crypto mining firm owned by Qimin “Jimmy” Chen, a naturalized US citizen of Chinese heritage.
He specifically referenced the Equal Protection Clause of the 14th Amendment in arguing against the legality of Rule K and Act 174, which prohibits states from denying any person equal protection under the law based on race, alienage, or national origin.
Furthermore, the crypto mining executive contended that these rules deny American citizens like Chen their due process rights as guaranteed by the 14th Amendment.
Kempton also argued that the restrictions and penalties imposed by Act 174 violate the federal government’s authority to investigate, evaluate, and act on foreign investments.
“Act 174 seeks to establish Arkansas’s own foreign policy, thereby intruding upon the federal government’s exclusive power to govern foreign affairs,” he stated.
On December 9, a District Court Judge ruled that state officials were prohibited from enforcing Act 174 against Jones Eagle until further notice.